Cap drop by 40%?

[Skatingpen]

Per Fillipponi,

“NHL expert Pierre McGuire tells @937theFan the NHL salary cap could be reduced by 40% for 2021. That would be a colossal mess. With guaranteed deals, teams can't reduce their payroll that much. How would the Penguins get cap compliant!!!“

[FLPensFan]

I saw this going around on Twitter. McGuire was saying cap could go down 25-40% because of loss of revenue from the season cut short.

You want my "expert opinion????" (Yes, Andy Sutton...I AM AN EXPERT) LOL

This cannot and will not happen. As some other things have stated on Twitter, the way the cap and the CBA is devised, ALL THE RISK is on the players right now. Revenues go down, players lose money. Players have escrow and lose money every year. There hasn't been a single year since escrow was introduced that players have gotten their full salary.

The NHL owners are going to have to bite the bullet here. They are going to have to take some losses, or going to need to take out some loans to help cover. If I am the NHLPA, and the NHL comes out and says, sorry guys, cap is going down to 60M next year because of the pandemic, you guys are screwed because we want all our money....I'd be on strike before they could even get that full sentence out.

Owner losses. Owner loans. Some type of agreement where for 1-2 years the "cap hits" are rolled back, or better yet, the salaries stay the same, but the "cap hits" count 5% less for each contract. So, a 10M AAV contract only counts 9.5M against the cap. That 5% across every player adds up pretty quickly, and a 5% reduction in effective cap hit is actually bigger than a cap increase to 84M. Cap going from 81.5M to 84M is only a 3% increase in cap.

Leave the salaries as is. A 5% cap hit rollback effectively costs the teams about 150M total, or about 5M per team...but, only 5M per team if you were spending to the cap. The effects will be a little bit bigger because they have real salary dollars to pay out this year, but, like I said, take a league wide loan or something that could easily be paid off in a year or two.

[Daniel]

I saw this going around on Twitter. McGuire was saying cap could go down 25-40% because of loss of revenue from the season cut short.

You want my "expert opinion????" (Yes, Andy Sutton...I AM AN EXPERT) LOL

This cannot and will not happen. As some other things have stated on Twitter, the way the cap and the CBA is devised, ALL THE RISK is on the players right now. Revenues go down, players lose money. Players have escrow and lose money every year. There hasn't been a single year since escrow was introduced that players have gotten their full salary.

The NHL owners are going to have to bite the bullet here. They are going to have to take some losses, or going to need to take out some loans to help cover. If I am the NHLPA, and the NHL comes out and says, sorry guys, cap is going down to 60M next year because of the pandemic, you guys are screwed because we want all our money....I'd be on strike before they could even get that full sentence out.

Owner losses. Owner loans. Some type of agreement where for 1-2 years the "cap hits" are rolled back, or better yet, the salaries stay the same, but the "cap hits" count 5% less for each contract. So, a 10M AAV contract only counts 9.5M against the cap. That 5% across every player adds up pretty quickly, and a 5% reduction in effective cap hit is actually bigger than a cap increase to 84M. Cap going from 81.5M to 84M is only a 3% increase in cap.

Leave the salaries as is. A 5% cap hit rollback effectively costs the teams about 150M total, or about 5M per team...but, only 5M per team if you were spending to the cap. The effects will be a little bit bigger because they have real salary dollars to pay out this year, but, like I said, take a league wide loan or something that could easily be paid off in a year or two.

Would it be possible to have cap 40% less, lower the salaries of all players by 40% and have the owners pay the difference over a few years? Not sure if I'm explaining it how I mean, so will use ZAR as an example, because even $1M. His salary next season would be $600K with the other $400K paid out over X amount of years and not count against the cap.

Make next year a one time only situation, then make it up to the players in 2021-22 season, maybe whatever the cap goes up add 10% permanently or something like that.

[FLPensFan]

I saw this going around on Twitter. McGuire was saying cap could go down 25-40% because of loss of revenue from the season cut short.

You want my "expert opinion????" (Yes, Andy Sutton...I AM AN EXPERT) LOL

This cannot and will not happen. As some other things have stated on Twitter, the way the cap and the CBA is devised, ALL THE RISK is on the players right now. Revenues go down, players lose money. Players have escrow and lose money every year. There hasn't been a single year since escrow was introduced that players have gotten their full salary.

The NHL owners are going to have to bite the bullet here. They are going to have to take some losses, or going to need to take out some loans to help cover. If I am the NHLPA, and the NHL comes out and says, sorry guys, cap is going down to 60M next year because of the pandemic, you guys are screwed because we want all our money....I'd be on strike before they could even get that full sentence out.

Owner losses. Owner loans. Some type of agreement where for 1-2 years the "cap hits" are rolled back, or better yet, the salaries stay the same, but the "cap hits" count 5% less for each contract. So, a 10M AAV contract only counts 9.5M against the cap. That 5% across every player adds up pretty quickly, and a 5% reduction in effective cap hit is actually bigger than a cap increase to 84M. Cap going from 81.5M to 84M is only a 3% increase in cap.

Leave the salaries as is. A 5% cap hit rollback effectively costs the teams about 150M total, or about 5M per team...but, only 5M per team if you were spending to the cap. The effects will be a little bit bigger because they have real salary dollars to pay out this year, but, like I said, take a league wide loan or something that could easily be paid off in a year or two.

Would it be possible to have cap 40% less, lower the salaries of all players by 40% and have the owners pay the difference over a few years? Not sure if I'm explaining it how I mean, so will use ZAR as an example, because even $1M. His salary next season would be $600K with the other $400K paid out over X amount of years and not count against the cap.

Make next year a one time only situation, then make it up to the players in 2021-22 season, maybe whatever the cap goes up add 10% permanently or something like that.

I think your idea would work as well. They need to be smart and come up with some type of idea like this, though.

[Jim]

There is no prevision in the CBA to cut player salaries by 40%, and you can not cut the cap by 40% because then you would end up with a 2 or 3 team league. It's just an idiot (McGuire) saying idiotic things because there is no junior midget peewee league team that he can mention while everyone else is talking about NHLers.

[FLPensFan]

There is no prevision in the CBA to cut player salaries by 40%, and you can not cut the cap by 40% because then you would end up with a 2 or 3 team league. It's just an idiot (McGuire) saying idiotic things because there is no junior midget peewee league team that he can mention while everyone else is talking about NHLers.

You are correct, there is no provision to cut player salaries by X amount. THERE IS, however, provisions that clearly state that the salary cap is based on a formula based on HRR (hockey-related revenue), and, revenue for last year is going to be down by a significant amount.

-loss of 10-14 games
-not only the gate money for attendance, but I'm not sure if the NHL sees any of the concession, parking, etc revenue that is also lost
-you can bet that league wide merchandise sales are down
-if games aren't airing, depending on how contracts were structured, you can bet that the league is losing money on advertising

So let's take the average of 10-14 games and go with 12 games. 12 games less revenue. That is an immediate loss of roughly 15% of revenues....assuming all revenues comes from ticket sales (which it doesn't).

I'd also add in that my educated guess on revenue from gate sales is probably 80% during regular season, and 20% of gate revenues come from playoffs (guess coming from higher ticket prices during these games).

I think it would be a safe bet to assume that, from ticket sales alone, the NHL stands to lose 10-25% of it's hockey related revenue. I don't think that is a stretch at all when you add in loss of advertising dollars and loss of merchandising sales.

A 10% cap rollback puts you at about 73.5M cap.
A 25% cap rollback puts you at about 61.25M cap

We've just rarely seen the cap go down or stay flat in some time...last time was during the lockout season. 2011-2012 had a 64.3M cap, 2012-2013 had a 60M cap (pro-rated to 70.2M for the shortened season), then 64.3M again in the 2013-2014 season.

So yes, based on how the CBA is written today, there absolutely could be a 25-40% reduction in the cap...unless the NHL and NHLPA are smart and come up with some type of alternative mechanism to adjust the cap for next season, because as you say, a cap that low won't let all the teams survive.

[Skatingpen]

There is no prevision in the CBA to cut player salaries by 40%, and you can not cut the cap by 40% because then you would end up with a 2 or 3 team league. It's just an idiot (McGuire) saying idiotic things because there is no junior midget peewee league team that he can mention while everyone else is talking about NHLers.

You are correct, there is no provision to cut player salaries by X amount. THERE IS, however, provisions that clearly state that the salary cap is based on a formula based on HRR (hockey-related revenue), and, revenue for last year is going to be down by a significant amount.

-loss of 10-14 games
-not only the gate money for attendance, but I'm not sure if the NHL sees any of the concession, parking, etc revenue that is also lost
-you can bet that league wide merchandise sales are down
-if games aren't airing, depending on how contracts were structured, you can bet that the league is losing money on advertising

So let's take the average of 10-14 games and go with 12 games. 12 games less revenue. That is an immediate loss of roughly 15% of revenues....assuming all revenues comes from ticket sales (which it doesn't).

I'd also add in that my educated guess on revenue from gate sales is probably 80% during regular season, and 20% of gate revenues come from playoffs (guess coming from higher ticket prices during these games).

I think it would be a safe bet to assume that, from ticket sales alone, the NHL stands to lose 10-25% of it's hockey related revenue. I don't think that is a stretch at all when you add in loss of advertising dollars and loss of merchandising sales.

A 10% cap rollback puts you at about 73.5M cap.
A 25% cap rollback puts you at about 61.25M cap

We've just rarely seen the cap go down or stay flat in some time...last time was during the lockout season. 2011-2012 had a 64.3M cap, 2012-2013 had a 60M cap (pro-rated to 70.2M for the shortened season), then 64.3M again in the 2013-2014 season.

So yes, based on how the CBA is written today, there absolutely could be a 25-40% reduction in the cap...unless the NHL and NHLPA are smart and come up with some type of alternative mechanism to adjust the cap for next season, because as you say, a cap that low won't let all the teams survive.

Well stated, something like this will affect the entire league, how we just don’t know yet

[Jim]

But that's not how business work. It's not going to be a 81.5M cap, then a year of $65M, then back up to $80M, figure next year is normal when people are done with being afraid of strong flu bug.

[Hatrick]

not possible, otherwise next year it would be the senators versus the coyotes by default in the finals? Congrats to the coyotes for their default cup win. Another ring for Kessel.

[DelPen]

Peeair is the only one with the super hot take that the cap will even decrease. All I have seen is it staying the same and there could be compliance buyouts allowed.

[FLPensFan]

Peeair is the only one with the super hot take that the cap will even decrease. All I have seen is it staying the same and there could be compliance buyouts allowed.

Word tonight is that the players have delayed receiving their final paychecks of the season until mid-May. There is some talk that they may give up final checks altogether as a way to help offset revenue loss.

Basically, neither the league nor the players want to get into a situation where the cap drops a significant amount, where there is compliance buyouts and extreme roster turnover. There is also talk of spreading the revenue loss over 3-5 years so it has less of an impact. It is being said that league and player discussions are going well, and the relationship between the two may be at an all time high right now.

[dark_forces]

Anyone see the latest TIOPS, particularly the portion discussing Rutherford’s appetite for moving letang? I’m curious about that that says.

[FLPensFan]

Anyone see the latest TIOPS, particularly the portion discussing Rutherford’s appetite for moving letang? I’m curious about that that says.

He basically says, really about Murray and Letang, that missing the rest of the season if it is cancelled is a huge blow to the Penguins in the evaluation of these two, and what to do with them. Penguins really wanted to see what these players brought in the playoffs before making any future decisions. Says Murray's perceived value (not sure if his or around the league) is 7-7.5M, but with a lost season, he might be forced to take a 1-2 year deal right around his current salary.

On Letang, he says the Penguins owe it to themselves to explore trade interest in Letang this summer, without getting cold feet this time. TIOPS claims that Rutherford was keen on moving Letang at the draft last year, until he received backlash from Crosby's inner circle on the morning of the draft that Crosby was strongly opposed to Letang being dealt.

[ville5]

Andy Strickland

@andystrickland

·

Apr 17

Players were told on a recent call, the salary cap will stay flat at $81.5 million for next season. #NHL #NHLPA

[Hatrick]

Anyone see the latest TIOPS, particularly the portion discussing Rutherford’s appetite for moving letang? I’m curious about that that says.

He basically says, really about Murray and Letang, that missing the rest of the season if it is cancelled is a huge blow to the Penguins in the evaluation of these two, and what to do with them. Penguins really wanted to see what these players brought in the playoffs before making any future decisions. Says Murray's perceived value (not sure if his or around the league) is 7-7.5M, but with a lost season, he might be forced to take a 1-2 year deal right around his current salary.

On Letang, he says the Penguins owe it to themselves to explore trade interest in Letang this summer, without getting cold feet this time. TIOPS claims that Rutherford was keen on moving Letang at the draft last year, until he received backlash from Crosby's inner circle on the morning of the draft that Crosby was strongly opposed to Letang being dealt.

with regards to evaluation, I would say the missed opportunity of evaluating Jarry in terms of how well he can replace Murray is just as important.

[FLPensFan]

Seth Rorabaugh of the Trib spoke to Rutherford on a few topics today. Among the highlights:

--Rutherford isn't doing any negotiations with RFAs right now. Basically said until he knows what the cap will be, no negotiations will occur. Only takes 1 or 2 contracts to put the team in trouble without knowing the cap number.

--Talked about ongoing talks to restart the league. Mentioned one of the biggest issues right now is that the US-Canada border is closed, and was just extended another 30 days. Any closure of that border makes restarting the league virtually impossible.

--Talked about conditional pick trades, specifically, Zucker and Marleau. Said he isn't overly concerned about the Zucker trade (which allowed the Penguins to defer their 1st if they missed the playoffs) because Zucker is a younger guy under team control. He does have concern about Marleau, who had a conditional pick tied to him as a"rental." Seems Rutherford and other teams are more worried about conditional trades for short term assets (rentals) more than deals like Zuckers.

[FLPensFan]

There is no prevision in the CBA to cut player salaries by 40%, and you can not cut the cap by 40% because then you would end up with a 2 or 3 team league. It's just an idiot (McGuire) saying idiotic things because there is no junior midget peewee league team that he can mention while everyone else is talking about NHLers.

You are correct, there is no provision to cut player salaries by X amount. THERE IS, however, provisions that clearly state that the salary cap is based on a formula based on HRR (hockey-related revenue), and, revenue for last year is going to be down by a significant amount.

-loss of 10-14 games
-not only the gate money for attendance, but I'm not sure if the NHL sees any of the concession, parking, etc revenue that is also lost
-you can bet that league wide merchandise sales are down
-if games aren't airing, depending on how contracts were structured, you can bet that the league is losing money on advertising

So let's take the average of 10-14 games and go with 12 games. 12 games less revenue. That is an immediate loss of roughly 15% of revenues....assuming all revenues comes from ticket sales (which it doesn't).

I'd also add in that my educated guess on revenue from gate sales is probably 80% during regular season, and 20% of gate revenues come from playoffs (guess coming from higher ticket prices during these games).

I think it would be a safe bet to assume that, from ticket sales alone, the NHL stands to lose 10-25% of it's hockey related revenue. I don't think that is a stretch at all when you add in loss of advertising dollars and loss of merchandising sales.

A 10% cap rollback puts you at about 73.5M cap.
A 25% cap rollback puts you at about 61.25M cap.
We've just rarely seen the cap go down or stay flat in some time...last time was during the lockout season. 2011-2012 had a 64.3M cap, 2012-2013 had a 60M cap (pro-rated to 70.2M for the shortened season), then 64.3M again in the 2013-2014 season.

So yes, based on how the CBA is written today, there absolutely could be a 25-40% reduction in the cap...unless the NHL and NHLPA are smart and come up with some type of alternative mechanism to adjust the cap for next season, because as you say, a cap that low won't let all the teams survive.

Want to go back to some of these numbers that I posted, which were mostly guesstimates at the time (the percentages of revenue lost ones). James Mirtle has a pretty detailed article today on The Athletic, that appears to corroborate much of what Pierre McGuire was saying, in a much more detailed non-Pierre way. Highlights:

--Today, pre-COVID-19, players were putting 14% of their salary into escrow. That's 14% of their salary they aren't getting. Now, they aren't losing all of that, but, the numbers I have seen, escrow has been between 10-14% the last several years, and players have never received more than 50% of that money back. Usually, they are getting 3-5% back.

--Mirtle states the league lost 15% of its regular season (not $, games). He also states that the playoffs make up a huge chunk of their revenues. The numbers out there right now, based on the loss of those 15% of regular season, the playoffs, and the TV advertising money that goes with it, is going to cost the league a $1b to $1.2 billion shortfall in revenues, which would be 20% of their revenues. That doesn't include the 14% players had already been setting aside in escrow before all this. You add those 2 together, you are at 34%, or a third of a players salary gone.

--The other problem is how the the league currently pays players. Players receive 13 pay checks a year, basically, twice a month during the season, with only 1 check in April (since the regular season is only about 2 weeks of April). The problem here is, the league is paying the players on salary the league EXPECTS to receive. If you wipe out the 15% of the regular season, and all of the playoffs, and lose an additional 20%...the players are likely going to have to pay that 20% back, plus the 14% in escrow. It's a mess.

--The 2 big problems with the paycheck issue and moving forward is, if there is talk of spreading the hit over several years, how do you deal with a player who retires or for whatever reason is no longer in the league next year. The other issue is, how do you spread the burden across the players and not just make the star players with the big salaries make up the bulk of the shortfall.

--Finally, there is major concern about next season. If next season is played but without fans, Mirtle estimates that the NHL will lose about 50% of its revenue, going from a $5b a year league to about half that. There are already reportedly some owners feeling a major financial strain with just a month of the season lost. There is some concern if all 31 teams could survive next year if games are played without fans.

[no name]

It would seem pretty easy to agree that players will get a percentage of their salaries for next season say just guessing to make it easy 50%, so if you make 8m you get 4m. Then at the end of the season you see how much the league has made then you pay what you can for the money you made. then say total revenues were 70% of what they expected then you pay the players the other 20% of their remaining salaries. I think all involved have to expect to loose some money this year.

[FLPensFan]

It would seem pretty easy to agree that players will get a percentage of their salaries for next season say just guessing to make it easy 50%, so if you make 8m you get 4m. Then at the end of the season you see how much the league has made then you pay what you can for the money you made. then say total revenues were 70% of what they expected then you pay the players the other 20% of their remaining salaries. I think all involved have to expect to loose some money this year.

I personally think a flat cap (no reduction or increase) for next season, and spread the losses over 3-5 years, is the best approach. Allow each team one compliance buyout.

I have also heard some rumors that the Penguins may not want to spend to the cap. Penguins have tried hard to avoid signing bonuses, the ones paid out every July. Tanev gets 1M of his contract via signing bonus. Malkin has a 5M signing bonus the last 2 years of his contract. That's an extra 6M in real salary the team will be paying out.

[FLPensFan]

It would seem pretty easy to agree that players will get a percentage of their salaries for next season say just guessing to make it easy 50%, so if you make 8m you get 4m. Then at the end of the season you see how much the league has made then you pay what you can for the money you made. then say total revenues were 70% of what they expected then you pay the players the other 20% of their remaining salaries. I think all involved have to expect to loose some money this year.

I personally think a flat cap (no reduction or increase) for next season, and spread the losses over 3-5 years, is the best approach. Allow each team one compliance buyout.

I have also heard some rumors that the Penguins may not want to spend to the cap. Penguins have tried hard to avoid signing bonuses, the ones paid out every July. Tanev gets 1M of his contract via signing bonus. Malkin has a 5M signing bonus the last 2 years of his contract. That's an extra 6M in real salary the team will be paying out.

[FLPensFan]

Per a tweet from some guy...(not a well known name, but a verified hockey reporter/radio host)

NHL looking at restarting season in July.

Games would be played at 4 or 5 neutral sites with limited or no fans, according to Florida Panthers president Matt Caldwell.

On the conference call, he said this plan is not finalized.

[Sams_Dog]

Peeair is the only one with the super hot take that the cap will even decrease. All I have seen is it staying the same and there could be compliance buyouts allowed.

Word tonight is that the players have delayed receiving their final paychecks of the season until mid-May. There is some talk that they may give up final checks altogether as a way to help offset revenue loss.

Basically, neither the league nor the players want to get into a situation where the cap drops a significant amount, where there is compliance buyouts and extreme roster turnover. There is also talk of spreading the revenue loss over 3-5 years so it has less of an impact. It is being said that league and player discussions are going well, and the relationship between the two may be at an all time high right now.

This would be a welcome change from the bitterness and stubbornness that we saw in the 1994, 2004, and 2012 work stoppages.

[FLPensFan]

Latest news from Bettman is that the neutral-site idea has been scrapped, and, from his view, it never really got that far off the ground. Biggest issue was, the neutral sites just weren't ready to host NHL games: not enough stands (if fans allowed), inadequate locker rooms, multiple facility issues, etc.

The latest is that the NHL is looking at using a 4 site rotation, with a site from each division...but that doesn't necessarily mean only games from that conference/division would be played there. Carolina and Edmonton were two of the sites. There was a site for the central division, but I can't remember who it was, and they said Metro division did not have a site named as of yet. This potential

There has also been some discussion about still having the draft in June, but, there are some obvious problems with conditional picks and such, as well as the draft order not being set by normal circumstances.

***Can you imagine if they did a June draft before the season ended, and used a Crosby-draft system to pick the order....and the Penguins won the 1st pick and shot to draft Alex Laferriere***

All indications still point to the current NHL season being finished in some way, and all indications are that the new NHL season WILL NOT start on time.

[Daniel]

Latest news from Bettman is that the neutral-site idea has been scrapped, and, from his view, it never really got that far off the ground. Biggest issue was, the neutral sites just weren't ready to host NHL games: not enough stands (if fans allowed), inadequate locker rooms, multiple facility issues, etc.

The latest is that the NHL is looking at using a 4 site rotation, with a site from each division...but that doesn't necessarily mean only games from that conference/division would be played there. Carolina and Edmonton were two of the sites. There was a site for the central division, but I can't remember who it was, and they said Metro division did not have a site named as of yet. This potential

There has also been some discussion about still having the draft in June, but, there are some obvious problems with conditional picks and such, as well as the draft order not being set by normal circumstances.

***Can you imagine if they did a June draft before the season ended, and used a Crosby-draft system to pick the order....and the Penguins won the 1st pick and shot to draft Alex Laferriere***

All indications still point to the current NHL season being finished in some way, and all indications are that the new NHL season WILL NOT start on time.

Seems like the neutral site thing would be bad for whoever is hosting with a ton of lost revenue. No fans, no concessions, but still paying to host? Sounds like a bad idea for any city.

[100565]

The NHL should be trying to turn a very negative situation into long-term positive.

No one has had any sports. People got to be craving....

The NFL will be in offseason. MLB will probably start around the same time, but it is sooo early in the season the games are not too exciting (admittedly, I do not like watching baseball - not even playoffs). The NBA will in similar situation to NHL.

In marketing, life changing events (baby, wedding, graduation, etc..the reason for free baby and wedding registries) are a great opportunity to gain new, life-long customers for retail. The virus has been life changing event for all.

If the NHL can get games in ASAP (but safe); highly competitive games ala playoff hockey or season ending hockey, they could draw many new, life-long customers. I think lots of people will watch the first pro sporting events after quanratine; however, the product has to be exciting and engaging to keep them coming back. My thought, if games are played, they should incorporate some of the sensor data the players wear. It would have to be very well designed. Also, TV schedule has to be full of playoff teams fighting for a spot - they cannot televise Wings vs Sens...let those games go to local TV.

On a side note, I enjoy hockey, but I will be irate when NFL, NHL, MLB, and NBA get some bailout money!!! Others need the money more. Pro sports probably needed a kick in the nuts.